Exam 2 13 October 2017, questions
Business Logistics (Deakin University)
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MMM267 Business Logistics
T2 2017
DEAKIN UNIVERSITY
FACULTY OF BUSINESS AND LAW
MMM267 Business Logistics
Trimester 2, 2017
Sample Final Examination
Special Instructions
This examination is CLOSED BOOK. Reading materials are NOT ALLOWED.
Calculators ARE ALLOWED. However use of any electronic communication
device (e.g. mobile phone/laptop/PDA etc.) is not permitted at any time during
the examination. Perusal time is 15 MINUTES and writing time is 2 HOURS.
This examination comprises of 6 questions of 10 marks each. Some questions
may have more than one part. No choices are available for this examination –
therefore all questions and all parts of each question have to be attempted. All
working steps must be shown for the numerical questions/parts of questions.
This examination is worth 60 marks and together with the 40-mark assignment
collectively constitutes the mandatory assessment items for this unit. There is
NO HURDLE requirement – you need to get a minimum of 50 marks as the sum
total of your assignment and final exam marks in order to overall pass this unit.
Please use the script booklet/s provided for your written responses, making
sure that each question is clearly numbered. Please write your Deakin Student
ID number CORRECTLY & LEGIBLY on the first page of your answer booklet/s.
This examination question paper MUST be handed in with
any used answer booklets at the end of the examination.
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MMM267 Business Logistics
T2 2017
Question 1 (10 marks).
Briefly discuss each of the four ‘foundation’ elements underlying supply chain management.
(10 marks)
Question 2 (10 marks).
(a) Why or why not should a firm ever consider outsourcing its core business?
(3 marks)
(b) You are given the following information:
Costs
Make Option
Buy Option
Fixed
$62,500
$2,500
Variable
$7.50
$9
(i) Find the break-even quantity and the total cost in dollars at the break-even point.
(4 marks)
(ii) What will be the right decision for the firm if the annual requirement is 30,000 units?
(3 marks)
Question 3 (10 marks).
(a) What is a weighted criteria supplier evaluation system?
(3 marks)
(b) DBS Manufacturing Company is performing an annual evaluation of one of its suppliers.
A score based on a scale of 0 (unsatisfactory) to 100 (excellent) has been assigned for each
performance category deemed critical in assessing this supplier as per the following table:
Performance Criteria
Score
Weight
Technology
85
10%
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MMM267 Business Logistics
T2 2017
Quality
Responsiveness
Delivery
Cost
Environment
Business
95
90
80
90
75
95
25%
15%
15%
20%
5%
10%
(i) How would you evaluate this particular supplier? Give your recommendation in
accordance with the following vendor rating scheme used by DBS Manufacturing Company:
Score < 50 – Unacceptable; supplier dropped from further business
50 ≤ Score < 70 – Conditional; supplier needs development work to improve
70 ≤ Score < 90 – Certified; supplier meets intended standard of performance
Score ≥ 90 – Preferred; supplier exceeds current performance standards
(3.5 marks)
(ii) By how much would the supplier need to improve their score under ‘Environment’ while
keeping their scores under all other criteria unchanged to move up to the next highest
rating?
(3.5 marks)
Question 4 (10 marks)
(a) In the context of supply chain management, explain what you understand by the
bullwhip effect.
(4 marks)
(b) The owner of the Chocolate Outlet Store wants to forecast demand. Demand for the five
preceding years is shown in the following table:
Year
1
2
3
4
5
Demand (kilograms)
46,000
49,000
53,500
49,200
48,800
Weights
20%
25%
55%
(i) Forecast the demand for Year 6 using a 3-year weighted moving average method.
(3 marks)
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MMM267 Business Logistics
T2 2017
(ii) How will your forecast change if the weights were all equal for the years 3, 4 and 5?
(3 marks)
Question 5 (10 marks)
(a) What are the main assumptions underlying the EOQ inventory model?
(3 marks)
(b) Given an annual requirement on 49,400 units, ordering cost per order of $85, inventory
carrying cost of 2% and a unit cost of $250, calculate the EOQ and the total inventory cost.
(7 marks)
Question 6 (10 marks)
(a) What are the five key concepts of lean production as per the Toyota Production System?
(3 marks)
(b) Deakin Compressors uses a lean production assembly line to make its compressors. In
one assembly area, the demand is 50 parts per eight-hour day. It uses a container that holds
four parts. It typically takes a full day’s shift to round-trip a container from one work centre
to the next and back again. Deakin also desires to hold a 7.5% safety stock of this part in the
system. How many containers should Deakin be using if it follows a Kanban system?
(7 marks)
*** End of Questions ***
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MMM267 Business Logistics
T2 2017
A selection of mathematical formulae from the weekly topics relevant for this examination:
1) If the Total making cost equation at the break-even point is aX + b = Y; and
the Total buying cost equation at the break-even point is mX + c = Y, then
X = (c – b)/(a – m).
2) Weighted criteria supplier evaluation score = Σ(Scorei x Weighti), for i = 1, 2, 3, …, n.
3) 3-period WMA forecast for Period 4 = W1 x D1 + W2 x D2 + W3 x D3 where W1 is the weight
given to the first (oldest) period, W2 is the weight given to the second (middle) period and
W3 is the weight given to the third (most recent) period. D1, D2 and D3 correspond to the
quantities of actual demand in the first, second and third periods respectively.
4) Inventory turnover ratio = Cost of goods sold/Avg. Inventory.
5) EOQ = √(2 x R x S/k x C), where R is annual requirement, S is ordering cost per order, k is the
percentage holding rate (i.e. carrying cost) and C is the unit cost per unit of inventory.
6) Total inventory cost for EOQ order size = (R x C) + (R/EOQ x S) + (EOQ/2 x k x C).
7) Kanban no. of containers = D x T x (1 + S)/C, where D is demand rate, T is time taken for a
container roundtrip, S is the safety stock percentage and C is the no. of units per container.
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